Reduce Home Loans

Reduce Home Loans is a non-bank lender that operates exclusively online and with phone support. It has served as the exclusive agent for mortgage manager Mortgage Ezy since 2010. 

As an exclusive agent, Reduce Home Loans works on behalf of funders who obtain their financing from institutional investors and banks. But unlike mortgage brokers who choose from publicly available loans and don’t have funds, Reduce, through securitisation, engages wholesale lenders in competition for business to pool a fund where it originates low-cost loans. 

According to the lender, a customer’s funder will depend on the loan product they apply for. Reduce’s home loans are funded by the likes of Bendigo & Adelaide Bank, Source Funding, Well Nigh, Origin MMS, Pepper Money, LaTrobe, and BC Funding. 

Reduce Home Loans claims its business model and efficient online operations enable it to provide competitively low rates to its customers across Australia. It also offers the flexibility of additional repayments and redraw facilities. 

What home loans are available at Reduce Home Loans?

Reduce Home Loans offers a range of fixed and variable rate mortgages with varying fees and features and a maximum of 90% loan-to-value ratio (LVR) to cater to different types of borrowers. 

Low doc home loan

Reduce’s version of a low doc home loan, Alt-Doc (alternate documentation) enables self-employed individuals or small business owners who can’t provide the standard proof of income paperwork like income tax returns and payslips to secure an owner-occupied mortgage. 

Would-be borrowers’ financial capacity will be assessed through the following alternative documents:

• Australian Business Number (ABN) registered to the entity

• Business Activity Statements (6-12 months)

• Proof of GST registration (6-12 months)

• Business bank statements (6-12 months)

• Personal bank statements (3 months)

• Tax returns (12 months)

• An income declaration from an accountant

Customers can take out $50,000-$1,000,000 at 80% LVR with an option for an offset account. Reduce Home Loans will also lend up to $1.75 million but borrowers need at least 35% equity to be eligible.  

Green home loan

Reduce Home Loans enables investors and owner-occupiers of sustainable homes to secure mortgages with lower interest rates if they can demonstrate that their properties have at least five features from this list:

• Solar power system 

• Battery energy storage

• Solar or heat water system

• Water storage

• Waterless composting toilet

• Home wastewater treatment system

• Reverse cycle air conditioning

• Wall and ceiling insulation

• Underfloor insulation

• Double-glazed and/or tinted windows

In instances where a property lacks at least five of the lender’s sustainable features, customers must indicate in the loan purpose the financing of purchase and/or installation of the features. 

Construction home loan

Borrowers building their homes can access Reduce Home Loans’ construction loan that pays portions of the agreed mortgage in phases (i.e. laying the base, putting up the frame, etc.). This allows homebuyers only to make payments and accrue interest on the value of funds released. 

In addition to the standard documents, construction home loan applicants need to provide the following: 

• Loan Council approval for the building project

• Signed contract with a construction company

• Finalised construction plans

• Contractor quotes for materials

• Insurance policies

The lender may also require customers to pay fees for various inspections and valuations if not included in their contracts with their builders. 

Cashback home loans

Reduce offers cashback bonuses to borrowers signing on to a fixed rate Investor Wealth Maximizer Cash Back or Home Owners Dream Cash Back home loan. Customers can get $2,000 up to $10,000 cashback – depending on the loan amount – on purchases and refinances applied directly through the lender; applications brokered through intermediaries are not eligible.

To qualify for the cashback, the loan amount must be at least $250,000 and the LVR is no more than 90%. Only individual Australian residents aged 18 years and over can get the bonus offer, and only one cash bonus will be given per approved eligible loan. 

All you need to know about Reduce Home Loans 

What are the features of Reduce Home Loans?

Key features of Reduce Home Loans' products include flexible repayment schedules and methods (i.e. direct debit and salary credit) as well as redraw facilities and optional offset accounts. The lender also offers customers a split rate option that allows a loan to be divided into multiple parts, with each part having either a fixed or a variable interest rate. 

It’s important to note that features and particulars (redraw transaction limits, for example) vary depending on the specific loan product and terms. Another example would be that while many of Reduce’s home loans have a linked offset account, not all come with this feature. 

What fees does Reduce Home Loans charge customers?

Fees charged by Reduce also vary based on the specific home loan product. For instance, most of its variable rate mortgages come with an application fee of around $440 (the lowest charged is $300 for the Basic Home Loan; the highest is $600 for the Basic Home Loan Investment), whereas those with fixed rates don’t charge anything for loan applications.

Although some of the lender’s loan products have upfront and settlement fees, many do not have ongoing annual fees, making them more cost-effective over the long term. Reduce also doesn’t penalise borrowers for making extra repayments, although a maximum limit for fixed rates may apply.

How to get approved for a home loan at Reduce Home Loans

To get approved for a home loan with Reduce Home Loans, applicants must be 18 years and above and an Australian citizen or permanent resident. The lender may ask would-be borrowers to present the following documents to verify their identity and citizenship status:

• Passport

• Driver’s licence

• Birth certificate

• Centrelink pension card

• Medicare card

• Recent rates or utility bills

Reduce also requires applicants to demonstrate their financial ability to service the loan by presenting the following documents. 

For employed individuals:

• Two latest payslips (or a letter confirming income earned and length of employment) 

• Three months of bank statements

For self-employed:

• Income tax returns for the most recent financial years

• Latest Notice of Assessment

The lender may also ask to see documentation from other income and bonuses received, as well as records confirming ownership of assets such as deposits, shares, investment properties, vehicles, and superannuation. 

Information on liabilities like car loans and credit card debts must also be presented. 

How long is the approval time for Reduce home loan applications?

The turnaround time at Reduce Home Loans can vary depending on the loan application and how quickly can the applicant provide the required documentation. 

Generally, once the lender receives and reviews an application, conditional approval may be given which shows would-be borrowers the loan amount they can take out. Final approval will then be granted provided that all required paperwork is submitted and the valuation completed.